South Carolina Legal Tender Act Would Treat Gold & Silver As Money

[Grandmastersexsay]

Right, but this bill doesn't change that.

That is exactly what it does. A person would no longer have to sell their gold or silver to pay their taxes with it. You don't have to pay capital gains tax if you barder a collectable.

 

[Sonny Tufts]

You don't have to pay capital gains tax if you barder a collectable.

Of course you do. The bill has no effect on federal tax law, which contains no exception for gains realized by bartering a collectible.

 

[Grandmastersexsay]

Of course you do. The bill has no effect on federal tax law, which contains no exception for gains realized by bartering a collectible.

If you never sell the collectable, you never pay capital gains taxes. Someone receiving a barter does have to pay income tax on the value the object or service received. The person bartering an object that has increased in value does not have to pay capital gains tax on that increased value. Since you are never selling the bartered item, you are never gaining capital. I think you are confused on capital gains taxes and reporting the value of a bartered good or service you receive for income tax purposes.

 

[Sonny Tufts]

The person bartering an object that has increased in value does not have to pay capital gains tax on that increased value. Since you are never selling the bartered item, you are never gaining capital. I think you are confused on capital gains taxes and reporting the value of a bartered good or service you receive for income tax purposes.

Bartering is exchanging one item of property for another. Absent a specific exclusion, gain realized on an exchange of property is included in gross income inder IRC §61(a)(3) and §1001. If the item exchanged in the transaction is a capital asset, the gain is capital gain; if not, it's ordinary income.

In other words, there's no tax difference between selling an asset for cash and trading it for property of equivalent value. If the value of what you receive exceeds your basis in the property you exchange, you realize income.

 

[Grandmastersexsay]

Bartering is exchanging one item of property for another. Absent a specific exclusion, gain realized on an exchange of property is included in gross income inder IRC §61(a)(3) and §1001. If the item exchanged in the transaction is a capital asset, the gain is capital gain; if not, it's ordinary income.

In other words, there's no tax difference between selling an asset for cash and trading it for property of equivalent value. If the value of what you receive exceeds your basis in the property you exchange, you realize income.

This is all true for the value of a bartered item you receive being applied to your income. If you use gold or silver to pay your taxes, you are not receiving anything of value, the state is. You get nothing for paying your state taxes. You can't argue that there is a dollar value equal to your tax bill for the roads, schools, police, corrections, healthcare, ect. that benefit you because there are people who receive those government services who pay less, or no state taxes at all. You get nothing for paying your taxes, so how can the value of that nothing be applied to your income?